After sharing my predictions for the 2024 S&P 500, let’s dive into what various industry experts are saying about the 2024 housing market. When I first posted about it towards the end of 2024, the forecasts for home prices varied from a decrease of 1.7% to an increase of 4.1%. Fast forward to January 29, 2024, and we’re seeing a slight uptick in these predictions.
Real estate is my go-to when it comes to building wealth. It not only generates income and offers utility but is also less volatile, easier to understand, can be improved upon, and gives you more control compared to stocks. In fact, earning rental income was the key factor that allowed me to retire early back in 2012. That’s why I’ve allocated around 50% of my net worth to real estate. I view real estate as a hybrid investment, combining characteristics of both bonds and growth assets, offering potential upside with limited downside.
For the average person, real estate can be a solid way to grow wealth over time. The discipline of setting aside savings each month, often enforced by mortgage payments, can be a powerful wealth-building tool, even for those who struggle with financial discipline.
Before we delve into the 2024 home price forecasts, let’s take a quick look back at the 2023 predictions to see how accurate the industry experts were. According to data from the St. Louis Federal Reserve, the median home price in America was $479,500 in the fourth quarter of 2022. By the third quarter of 2023, this figure had dropped to $431,000, marking a 10.1% decline. We’ll have to wait for the fourth-quarter data to see the full picture for 2023.
While different housing data aggregators may provide varying numbers, I prefer to stick with the St. Louis Fed data for consistency. It’s clear from the data that there was a noticeable dip in median home prices in 2023.
Looking ahead to 2024, various industry experts like MBA, Fannie Mae, Freddie Mac, and others have put forth their predictions. As of the end of 2023, these forecasts show an average expected increase of 2.5% in home prices for 2024, up from 1.5% at the end of the previous year. Notably, Redfin forecasts a 1% decrease for 2024, contrasting with the general upward trend predicted by others.
My own forecast for 2024 leans towards a more optimistic outlook, with a projected 4.5% increase in median home prices. I believe several factors, including pent-up demand, declining mortgage rates, and continued stock market growth, will contribute to this rebound.
While market predictions can be uncertain, the overall macroeconomic trends suggest a positive outlook for real estate in 2024. Local factors may influence specific markets differently, but the general trend seems to point towards stability or even slight gains.
If you’re considering investing in real estate amidst these forecasts, options like private real estate funds offered by Fundrise or public REITs and real estate ETFs could be worth exploring. These investments could potentially benefit from a rebound in real estate prices.
